Social Security Confirms A New Check Increase In 2024 – Here’s Exactly When
According to Lagradaonline, In June, over 51 million retired workers relying on Social Security received an average monthly benefit of $1,918.28, translating to just over $23,000 per year. Although this may not seem like a large amount, Social Security has been a vital source of income for retirees for decades, helping them manage their expenses.
Social Security has also played a key role in reducing poverty. In 2022 alone, the program lifted 22.7 million people above the federal poverty line, including 16.5 million adults aged 65 and older. Surveys by Gallup over the past 23 years show that between 80% and 90% of retirees depend on Social Security to meet their financial needs. This heavy reliance on benefits explains why the announcement of the annual cost-of-living adjustment (COLA) in October is highly anticipated. While the 2025 COLA is expected to be historically significant, many beneficiaries may still find it insufficient.
Why Social Security’s COLA Matters for Retirees
The COLA is crucial for retirees because it adjusts benefits annually to keep pace with inflation, ensuring that they don’t lose purchasing power over time. Prices for goods and services naturally rise, and the COLA helps maintain retirees’ ability to afford these essentials. Before 1975, there was no systematic approach to adjusting benefits. That changed when Social Security began using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to measure inflation and adjust benefits accordingly. The CPI-W tracks various spending categories and subcategories, assigning specific weightings to calculate a monthly figure, which is compared year-over-year.
To calculate the COLA, only the CPI-W readings from the third quarter of the year (July through September) are considered. If the average CPI-W for this period is higher than the previous year’s, it indicates inflation, and Social Security benefits are adjusted upward. The percentage increase in the third-quarter CPI-W, rounded to the nearest tenth of a percent, determines the size of the COLA for the following year.
Also Read: – BIG UPDATE: Social Security Announces Major Changes to November 2024 Payments
Recent COLAs and Predictions for 2025
In the past three years, Social Security beneficiaries have seen significant COLA increases due to high inflation. For example, the COLAs for 2022, 2023, and 2024 were 5.9%, 8.7%, and 3.2%, respectively. The 8.7% increase in 2023 was the largest in 41 years, providing the biggest nominal boost to monthly benefits since the program’s inception.
After the U.S. Bureau of Labor Statistics released its June inflation report, estimates for the 2025 COLA were adjusted. The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, predicts a 2.63% increase, while independent Social Security and Medicare policy analyst Mary Johnson projects a 2.7% increase. A 2.6% to 2.7% COLA would result in an additional $49.88 to $51.79 per month for the average retired worker, bringing their monthly benefit close to—but still below—$2,000. For other beneficiaries, such as 7.2 million workers with disabilities and 5.8 million survivors, the monthly increase would range from $39.20 to $41.52.
The Limitations of the COLA and Its Impact on Retirees
While a fourth consecutive year of above-average COLAs might seem positive, the reasons behind these increases are worrisome for retirees. One issue is that the CPI-W, which has been used to calculate Social Security’s COLA for nearly 50 years, reflects the spending habits of urban wage earners and clerical workers—primarily working-age adults who are not receiving Social Security benefits. This makes it an imperfect measure of inflation for retirees, who make up 86% of Social Security’s 68 million recipients.
Retirees often face higher inflation in critical expense categories such as shelter and medical care. In June, the 12-month inflation rate for shelter was 5.2%, while medical care services saw a 3.3% increase, according to the Consumer Price Index for All Urban Consumers (CPI-U). Even if the 2025 COLA matches the predicted 2.7%, it would fall short of covering inflation in these essential areas, leading to a continued loss of purchasing power for many Social Security beneficiaries. This trend has been an issue for decades, contributing to a decline in the buying power of Social Security benefits since the early 2000s.
In conclusion, while the COLA plays a crucial role in adjusting benefits for inflation, it may not be sufficient to cover the rising costs faced by many retirees, particularly in essential areas like housing and healthcare.
